SIP Calculator
Calculate the future value of your Systematic Investment Plan (SIP). See how regular monthly investments grow over time with compound returns.
How Systematic Investment Plans (SIP) Work
A Systematic Investment Plan allows you to build wealth steadily by investing a set amount each month. Instead of trying to time the market, SIP leverages compound interest and cost averaging to grow your portfolio over your chosen investment horizon.
Understanding the SIP Formula
The future value of your monthly investments is calculated using the standard annuity compounding formula:
- FV: Future value of your investment
- P: Amount invested each month
- r: Periodic monthly rate of return (Annual Rate / 12 / 100)
- n: Total number of monthly contributions (Years × 12)
Frequently Asked Questions
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is an investment method where you invest a fixed amount of money at regular intervals (usually monthly) into a mutual fund or investment portfolio, benefiting from rupee-cost averaging and compounding.
How does the SIP calculator work?
The SIP calculator uses the compounding formula: FV = P × [((1 + r)^n - 1) / r] × (1 + r), where P is your monthly investment, r is the monthly rate of return, and n is the total number of monthly contributions.
What is the difference between SIP and a Lump Sum investment?
In a SIP, you invest small amounts periodically, reducing the risk of market volatility through cost averaging. In a lump sum investment, you invest the entire amount upfront, which maximizes time in the market but carries higher timing risk.
Are SIP returns guaranteed?
No. Mutual fund SIP returns depend on market performance. The expected annual return rate entered in the calculator is an estimate for projection purposes based on historical averages.